Question

Under- or overapplied manufacturing overhead at year-end is most commonly:

		charged or credited to Work-in-Process Inventory.
		charged or credited to Cost of Goods Sold.
		charged or credited to a special loss account.
		prorated among Work-in-Process Inventory, Finished-Goods Inventory, and Cost of Goods Sold.
		ignored because there is no effect on the Cash account.

Answer 1

ANSWER

Under- or overapplied manufacturing overhead at year-end is most commonly-

- charged or credited to Cost of Goods Sold.

Under or Over applied overhead- It is the difference between the actual and applied overhead.

If the actual overhead incurred is more than the overhead applied during a particular period, then it is a case of under-applied of overhead cost.

If the actual overhead incurred is less than the overhead applied during a particular period, then it is a case of over-applied of overhead cost.

If it is underapplied then it will be credited to cost of goods sold and if it is overapplied then it will be charged to cost of goods sold.